Startup mentors discuss strategies and challenges of creating a new business.

It’s User Privacy, Stupid

GUEST MENTOR Jonathan Schwartz, CEO of CareZone: The big money is in privacy. Why? Because, just like a cheap stock, privacy is an undervalued asset. And whether it is Facebook selling your children’s location history, or Verizon managing all the texts you’ve ever sent, the perceived value of that privacy is on the rise. And in front of employers, insurers, admissions committees or even on the play yard, some information is better kept entirely under your control.

The Market is Inefficient. Today, the market for privacy is enormously inefficient, with market leaders leveraging dominant positions to craft complex privacy policies written to obscure the obvious: information about you and your family is among the most valued treasure a social media company can harvest. That is where the phrase, “you’re not their customer, you’re their product,” comes from — social media sites make money by selling the data you think you’re sharing with your friends. They sell your children’s location information or your searching for a memory care facility for your Dad to their real customers: the highest bidders, in the form of global advertisers or shady information aggregators. It’s their choice, not yours.

Businesses have the option of managing downside risk through companies like Reputation.com. But consumers have little ability, other than global uprising, to stop a company whose policies turn against them. Witness the firestorm surrounding Facebook is recent landgrab of your Instagram images. It is even harder to manage information that is covered under a policy that was too complicated, or too long, to read.

Accessibility is Part of Safety. Until recently, consumers have viewed their desk drawers or filing cabinets as the only place for truly private information (like your children’s social security numbers, or your elderly father’s bank passwords). But is your information really more secure at home? it’s hard to access your desk drawer from your smartphone, and harder still to share a file cabinet with a spouse or sibling when you’re on the road — or find yourself in an emergency. Add in having to survive the Sandy storm surge or the Mayan apocalypse, and a good datacenter’s likely more reliable and convenient than your den.

Until recently, internet privacy was an oxymoron. But that’s changing.

The Year Ahead. I would expect 2013 to be the year more consumers recognize the value of managing private information online. I would also expect more businesses to lobby against stronger consumer privacy protections, on the grounds it is not good for innovation (watching Facebook lobby against privacy “to protect consumers” reminds me of the NRA lobbying against gun restrictions with the same message).

I’d also expect an ever more educated population of parents and informed consumers, and the businesses that cater to them, providing a stronger and stronger counterweight. The privacy debate’s ramping up for its most visible and vocal year, ever.

Opportunities Everywhere. In 2013, the market’s going to start clearing, with users demanding simplified, clear privacy policies that guard against undesirable outcomes. And you’ll see more and more businesses responding with high value services that serve real needs — with consumers as their end customer, not information aggregators or advertisers. That’s why I started my company, CareZone.com – so families everywhere have a safe, ad-free place to manage, and share their private information. And we’re not alone—there are throngs of great innovators and entrepreneurs building businesses on a foundation, not an illusion, of privacy.

The privacy topic’s not going away any time soon — nor is the business opportunity for companies that focus on and truly deliver a commitment to privacy. 2013 is going to be an exiciting year.

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